Knocking noise when clutch engaged

Bearing gone in trans or a tooth missing off the cluster.

Hi,it sounds from what you are saying that you have got a inturnal falt with the gearbox,im affried the only way to make a propper diagnoses is to take it apart and look at the gear sincros there has to be worn bearings,or teeth on the gears,or the sellector,or something has just manidged to come loose.
I wish you all thhe best.

transmission synchronizers most common cause of transmisson noise in certain gears, and not others, might want to check the gear oil level. Transmission rebuild required. To read about them and what they actually do, then here is a good read:
When you shift gears in your standard shift car, you move a rod that moves a fork that engages the gear. Depending which gear you're shifting to, a different fork does the job. The fork moves the collar to the desired gear, and dog teeth on the collar mesh up with holes on the gear in order to engage it. You engage reverse gear through a separate, small idler gear. The reverse gear always turns in the opposite direction of the other (forward) gears.
In years past, double-clutching was common in order to disengage a gear, allow the collar and next gear to reach the same speed, and then to engage the new gear. To double-clutch shift, you pushed the clutch pedal to free the engine from the transmission. Then the collar moved into neutral. You released the clutch and revved the engine to get it to the right rpm value for the next gear so the collar and the next gear spun at the same rate to allow the dog teeth to engage the gear. When the engine hit the right speed, you depressed the clutch again in order to lock the collar into place on the next gear.
Modern cars use synchronizers in order to avoid the need for double-clutching. A synchronizer, or "synchro," lets the collar and gear synchronize their speeds while they're already in contact but before the dog teeth engage. Each manufacturer's synchro is slightly different than the others, but the basic idea is the same. For instance, a cone on one gear will fit into a cone-shaped depression on the collar. The gear and collar synchronize their speeds thanks to the friction between the cone and collar. Then the outer part of the collar moves out of the way so that the gear can be engaged by the dog teeth.

the throw out bearing has not been properly installed on the fork

I would be checking the throwout bearing. But, if the clutch isn't slipping, maybe leave it for now?

If you put it in 5th gear, let out the clutch with handbrake applied and it stalls--the clutch isn't slipping for sure.

The fan clutch can make a knocking noise when it tries to engage. At idle it will have a rhythm to it when it tries to engage. You will have an over heating condition and the air conditioning may not work properly.

The fix is to replace the fan clutch and reprogram the engine control module.

If you are hearing a bad grinding noise then Stop riding the bike NOW. If you continue to ride, or run the engine, you will only do more internal damage and make the repair cost higher. Chances are you have a bent shift fork and the noise is the engaging dogs on the slider gear grinding the side of a fixed gear because the bent fork is preventing full engagement.

The entire engine comes out of the frame and gets completely torn down. The top end comes off, the case covers come off, the clutch, shift shaft, kick starter, flywheel and electrics all come off. Then the case is split to gain access to the gears and shift drum. The gears and shift drum now get removed and now the fork can be replaced. If a gear needs to be replaced because of a broken teeth, replace also any gear the teeth mesh with. A few special tools are needed. Sorry for having to give you the bad news.

A “very helpful” rating for this answer? Thanks!

Sounds like the clutch through out bearing might be bad.Is it hard to shift?Does the pedal come up high befor the clutch engages?

relpace the clutch pressure plate and throwoout bearing. It all comes in a clutch kit.

you may have a bad transfer case